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Euro broadly lower on debt worries, Bernanke ahead

Published 07/16/2012, 06:34 AM
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Investing.com - The euro was broadly lower against its major counterparts on Monday, as concerns over the euro zone debt crisis and rising peripheral bond yields weighed, ahead of ahead of testimony on the U.S. economy by Federal Reserve Chairman Ben Bernanke.

During European late morning trade, the euro was weaker against the U.S. dollar, with EUR/USD down 0.47% to 1.2191.

The euro came under pressure amid uncertainty over whether some bondholders could be forced to accept losses under the terms of Spain's bank bailout.

The yield on Spanish 10-year bonds rose to 6.71%, re-approaching the critical 7% threshold, widely seen as unsustainable in the long run. The yield on Italian 10-year bonds ticked up to 6.05%.

Elsewhere, Germany’s constitutional court announced that it will deliver a ruling on whether the euro zone’s permanent bailout fund contravenes the German constitution on September 12, disappointing hopes for an earlier decision.

Meanwhile, investors were looking ahead to Fed Chairman Ben Bernanke's testimony on the economic outlook to the Senate on Tuesday and Wednesday, amid ongoing speculation over whether the central bank will introduce more easing measures to stimulate the economy.

The euro slid to a three-and-a-half year low against the pound, with EUR/GBP losing 0.18% to trade at 0.7849 and dropped to a six-week low against the yen, with EUR/JPY down 0.70% to 96.29.

The euro remained little changed against the Swiss franc, with EUR/CHF inching up 0.01% to 1.2010.

The euro was trading close to record lows against the Canadian, Australian and New Zealand dollars, with EUR/CAD shedding 0.37% to hit 1.2370, EUR/AUD down 0.38% to hit 1.1930 and EUR/NZD falling 0.38% to 1.5328.

The euro shrugged off official data official showing that consumer price inflation in the bloc held steady at 2.4% in June, unchanged from the previous month and in line with market expectations.

Month-on-month, CPI declined 0.1%, compared to expectations for a flat reading, after falling 0.1% in May.

Later Monday, the U.S. was to publish official data on retail sales and business inventories, as well as a report on manufacturing activity in New York. In addition, the International Monetary Fund was to publish forecasts for global economic growth.


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